Viacom Stock Rises as CEO Touts Coming of Entertainment Skinny Bundle
Nickelodeon's 'The Wild Thornberrys'

Viacom Inc. (VIAB) is in the midst of so many turnarounds that company watchers might be excused for losing track of all of them.

On Wednesday, Sept. 13, at the Goldman Sachs Communacopia media conference, CEO Bob Bakish said that efforts to re-energize Viacom's TV networks, right long-tilting Hollywood studio Paramount Pictures and stabilize its position within the pay-TV universe are all moving along quite well. Maybe better than has been reported, citing improved ratings at MTV, BET and Comedy Central, he said.

"You are in the early innings of a Viacom that is clearly coming back to life," Bakish said. "It is a clear playbook, it's being executed. You see progress on the distribution side, you see progress on the audience side, you see progress on the advertising side, you see momentum on international."

A mouthful, certainly. But apparently enough to convince some investors that Viacom is on a more promising trajectory than it had been under Bakish's predecessor, Philippe Dauman. Viacom shares surged 3% on Wednesday to $27.91.

In just nine months, Bakish has overhauled Viacom's TV station group, putting in new chiefs at MTV, VH1 and Spike -- soon to be rechristened the Paramount Network -- while remaking the programming lineup at BET. Nickelodeon remains Viacom's best-performing network. Paramount also has been overhauled, a process that Bakish admitted remains a work in progress. The studio "ate more than $1 billion in cash in 2016," he said.

To reverse declines in pay-TV subscribers, Bakish hinted that before year's end, Viacom will be part of a nonsports skinny bundle of entertainment networks. The package is aimed at younger viewers and consumers more generally who have long been frustrated by the cost of the traditional pay-TV bundle but had few alternatives for watching video.

Viacom is expected to join forces with other owners of nonsports networks including Discovery Communications Inc. (DISCA) , AMC Networks Inc. (AMCX)   and Scripps Networks Interactive Inc. (SNI)  in the coming weeks on a package that would cost less than $20 per month, The Wall Street Journal reported on Tuesday, citing people familiar with the situation.

The report follows others earlier in the year that said Viacom was working on such a package.

It remains to be seen whether an entertainment package will be offered direct to consumers, as the Journal reported, or through pay-TV operators, which previous reporting revealed was the more likely scenario. Viacom has been loath to disrupt its relations with pay-TV providers, given the need for time as it introduces new programming at its networks, principally MTV.  

Viacom CEO Bob Bakish
Viacom CEO Bob Bakish

In May, Charter Communications Inc. (CHTR) , which has rebranded its service as Spectrum, removed MTV, VH1 and Spike from its basic offering, pushing all three channels into a more expensive bracket. By reducing distribution of the three channels, an effort aimed at holding down the price of its basic bundle, Charter dealt Viacom a blow to its revenue.

That dispute remains ongoing.

"We have a disagreement with Charter over packaging," was all Bakish would say on Charter, though he was quick to tout Viacom's recently renegotiated deal with Altice USA Inc. (ATUS)

The re-tiering by Charter applied only to new customers in certain parts of its coverage area. Viacom, though, also has struggled to gain carriage on some of the newer direct-to-consumer pay-TV packages such as YouTube TV from Alphabet Inc. (GOOGL) and Hulu LLC's expanded streaming package.

Bakish countered that Viacom's channels are included on Dish Network Corp.'s (DISH) Sling TV and AT&T Inc.'s (T) DirecTV Now.   

"We continue to be in discussions more broadly," he said. "Distribution is important, and we're really excited about the opportunities."

Unmentioned during the Goldman Sachs presentation was any further insight into what might be holding back or terminating a Chinese film financing agreement with Paramount worth roughly $1 billion over three years. The financing was to cover about 25% of the cost of film production. Viacom last month acknowledged that it didn't receive an expected payment over the summer from the Shanghai Film Group Corp. and Huahua Media, its would-be financing partners.

Like many parts of Viacom, the studio is in the midst of major turnaround. In March, Bakish hired longtime film executive Jim Gianopulos to lead Paramount just months after Viacom's board of directors ended former CEO Philippe Dauman's efforts to sell 49% of the studio to slice its debt load.

"We pivoted from Paramount being a part of the company that was going to go away to being an integral part," Bakish said. "Paramount had been an island, and for the past couple of years had been extremely unsuccessful."

Under Gianopulos, he said, the studio has rebuilt its management team, hiring new directors in product development, sales and animation.

"The annoying thing is that the arc of a film is about two years; the reality is a new slate won't be coming to air until '19, but this thing is definitely moving in the right direction," Bakish said.

Viacom might be a takeover target were the great majority of the company's controlling shares not held by the Redstone family, and in particular Shari Redstone. Viacom owns an enormous Hollywood studio as well as cable networks Nickelodeon, MTV and Comedy Central, among others. It also has built, rather quietly, a formidable string of international assets led by TV channels in both the U.K. and Argentina.

Viacom is controlled by the Redstone Trust, which also controls CBS Corp. (CBS)  

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